Some high frequency traders in Chicago made a lot of money by having 7 milliseconds advance notice of the recent Fed decision:

In the wake of an unusual trading pattern after the Federal Reserve’s decision to continue economic stimulus last week, Fed officials have contacted certain news organizations to discuss rules and procedures for the central bank’s advance release of sensitive information, CNBC has learned.

On Sept. 18, the Federal Reserve shocked the financial world with its decision not to scale back its level of support to the economy as most market participants expected.

Financial markets reacted at the speed of light, pushing stocks dramatically higher in just moments. But it looks like the speed of light just wasn’t fast enough for some traders.

Some traders in Chicago appear to have had access to the Fed’s decision before anyone else in the Windy City. According to trading data reviewed by CNBC, they began buying in Chicago-traded assets just before others in that city could possibly have been aware of the Fed’s decision. By one estimate, as much as $600 million in assets changed hands in the milliseconds before most other traders in Chicago could learn of the Fed’s September surprise-a sharp contrast to the very low volume of trading ahead of the Fed’s decision.

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The precise timing of the release is crucial because information can only travel as fast as the speed of light-a physical reality first laid out by Albert Einstein. Information-like a Fed decision-released in Washington takes as much as 7 milliseconds to travel to Chicago, where futures and other assets are traded. And because high-speed trading firms are now able to execute trades at the millisecond level, there is a brief window of time in which information can be publicly available in Washington but is still traveling to Chicago, where computers won’t receive it until milliseconds later.

Thanks to modern technology, that window is long enough for some to profit if they know which direction the market is about to go and can place millisecond-level trades accordingly. None of this trading would typically involve a human being-it takes slow-moving humans about 300 milliseconds just to blink an eye, making them much too slow to react to news at the millisecond level. Instead, high-speed data feeds are plugged directly to algorithmic trading computers, which in turn analyze the news as it comes in and execute pre-programed trading strategies.

What apparently happened is that a reporter who was given the information ahead of time, the Federal Reserve does this in a locked room (really) under sequester.

The reporters can prepare their reports, but they cannot release any information before 2:00 pm.

Someone cracked the system, and used the speed of light to gain a competitive edge.

The bitch is, I am not sure that this was illegal.

Whoever did this did not act on non-public information, it had been released publicly at 2:00pm EDT, which is when they traded, they simply beat the information going down the wires .

It should be illegal, and I’d love to see someone prosecute these motherf%$#ers.